With the $33.7 million – $102,000 per suite – purchase of a 331-unit property in Surrey’s Guildford area, Calgary-based Mainstreet Equity Corp. now has a lock on more than 30 per cent of Surrey’s rental apartments. Mainstreet, one of Western Canada’s largest landlords, owns 1,700 apartments B.C.’s fastest-growing city, and more than 2,700 units across the Lower Mainland, confirmed company founder Bob Dhillon. Publicly listed Mainstreet, now valued at more than $100 million, also controls about one-third of the Abbotsford rental apartment universe.

Deal: 17-storey Viva Tower on Howe Street, Vancouver, a mixed-use office and hotel building, which is to be converted into 230 rooms of student rental housing by the new owners, CIBT Subsidiary Investment Group.

Deal: 328-room Calgary Airport Marriott hotel portfolio, consisting of the 171-room Courtyard and the 157 Residence Inn within a 265,200-square-foot complex next to the Calgary International Airport. Sold to J.A.R. Enterprises Ltd., a Remai Group affiliate. Price: $66 million.

NAI Commercial of Vancouver has sold the Rise Golf Club in Vernon. The 18-hole, 144.5-acre golf course was bought through a court-ordered sale by Alberta investors, according to NAI agent J.D. Murray.

The foreclosed golf course was sold on behalf of the Business Development Bank of Canada. The original asking price was $2.2 million for the Fred Couples-designed course. The clubhouse and the residential development were not included in the court ordered sale.

Last March, China-born Owen Wang, a recent immigrant to Canada, purchased the 18-hole Sechelt Golf & Country Club and said he plans to sink $20 million into improvements, including the construction of a hotel on the site.

Investors from mainland China have also purchased a marine resort at Garden Bay on the Sunshine Coast, a 43-acre island off the coast of Pender Harbour and even the Gibson’s movie theatre. A Chinese group is also eyeing a multifamily development site in Gibsons.

Chinese offshore investors were behind the purchase of an Okanagan lakeside resort last summer and an equestrian centre in Langley and are backing a $50 million hotel project in Nanaimo and a ghost town near Whistler.

In Vancouver, the 120-room Best Western Sands Hotel at 1755 Davie Street, was recently sold for $30.3 million to a numbered company backed by Asian capital. According to study by hotel consultant HVS International, investors from China also purchased the Days Inn in Vancouver and a “good portion” of hotel-condos in the Westin Grand hotel.

In January, a Chinese-born Canadian with homes in Hong Kong and Vancouver bought a 234-acre development site straddling Port Moody and Anmore on the southeast edge of Metro Vancouver through Vancouver-based Brilliant Circle Group (BBG).

This could be a “groundbreaking year for Chinese outbound investments,” according to Chadbourne & Parke LLP, an international law firm headquartered in New York City. Its 2014 report China Widens Door to Outbound Investment, noted that offshore Chinese investments “other than in the financial sector” reached US$90 billion in 2013 and hit US$20 billion in the first three months of 2014.

“This is just the beginning for Vancouver,” said Tina Mak, president of Asian Real Estate Association of America, Vancouver Chapter, and a realtor with Coldwell Banker Westburn Realty. Mak expects a huge increase in sales of B.C. commercial real estate to buyers from China.

Last April, China’s government relaxed constraints on citizens buying in other countries. Now, deals under $300 million may not even hit regulator’s radar. “China has opened the door to outbound investment more widely than ever,” Chadbourne & Parke commented.

While much of the offshore real estate money flows from China into New York, London, England and Los Angeles – the most popular cities for Asian investors – Vancouver is considered among the top secondary targets.

While Mak said return on investment is the primary aim, followed by “the brag factor”, some immigrant investors are apparently drawn to B.C. as much for the lifestyle.

The new owner of Sechelt Golf and Country Club, for example, said the profit motive was not the main driver for his investment decision.

Wang said he wanted to purchase the course for three reasons: his love of golf, the quality of life and natural beauty in Sechelt and the possibility of retirement in the area.

Done Deals is our monthly feature highlighting some of the major real estate transactions in Western Canada’s vibrant commercial real estate market.

Innvest buys Hyatt Regency in Vancouver

Toronto-based Innvest has a definitive agreement to acquire the 644-room Hyatt Regency Vancouver from an affiliate of Hyatt Hotels Corp. for $140 million, or $217,000 “per key”.

InnVest expects to finance the purchase with a $70 million, 3.8 per cent floating rate mortgage, with the balance to be paid in cash. The acquisition of the Hyatt completed in December 2014.

Built in 1973, the Hyatt is centrally located in downtown Vancouver. The Hyatt provides some of the largest standard guestrooms in the city and features 45 Regency Club rooms and 20 suites. The Hyatt also offers 40,000 square feet of meeting space and three food and beverage outlets.

Nobel laureate and economist Vernon Smith speaks in Vancouver. A sudden drop in housing starts seen as the first indicator of a recession.

- Dale Northey/ SFU

By Frank O’Brien

Housing bubbles have been a leading indicator in 11 of the 14 economic recessions since 1929, but based on a formula presented by a Nobel laureate and economist, British Columbia and Vancouver appear bubble-resistant.

Vernon Smith, awarded the Nobel Memorial Prize for Economic Science in 2002 for his work in empirical economic analysis, is a professor at Chapman University in California and president and chair in finance at the International Foundation for Research in Experimental Economics. He spoke to a packed crowd November 14 in Vancouver in an event presented by Simon Fraser University and the Bank of Montreal.

Smith, 87, who recalls his family’s Kansas farm being foreclosed in 1934, said a downturn in the housing market was precursor to the Great Depression, the 2007 “great recession” and virtually every other recession in-between. “It is nearly 100 per cent accurate,” he said.

The key indicator, Smith said, is housing starts. Homebuilders, he said, are much more aware and reactive to changes in the market than typical homeowners, home buyers or lenders. “They see what is happening first,” he said.

Early in 2006, starts of U.S. housing suddenly began falling from record highs while all other economic indicators were still increasing, Smith noted. A year later, home construction had virtually stopped, U.S. home equity had shed $500 billion in value and the world was in the grip of the worst economic crisis in 100 years.

However, in a follow-up interview with Western Investor, Smith noted, “all housing markets are regional.” Housing sales and prices in Prudhoe Bay, Alaska and North Dakota, for example, continued strong right through the 2006-2010 downturn, he said, because of strong job generation and high in-migration.

Using Smith’s formula for housing bubble-burst scenarios, B.C. and Vancouver do not appear threatened, despite record-high prices in the latter. B.C. housing starts this year are up 3.1 per cent from 2013 and forecast to rise a further 1.4 per cent in 2015, according to Canada Mortgage and Housing Corp. In Vancouver, housing starts are up 5 per cent from a year ago and are projected to dip slightly next year, but increase about 3 per cent into 2016.

As well, the B.C. unemployment rate remains low; the province is attracting about 39,000 immigrants annually and, for first time in four years, is seeing a net increase in interprovincial migration.

“We do not see a housing bubble in the Metro Vancouver market, nor elsewhere in B.C.,” said Bryan Yu, ?regional economist with Central 1 Credit Union, which released a fairly bullish outlook for the B.C. housing market earlier this year.

“Currently, inventories are in decline in both the existing and new home market, suggesting a well-balanced market. There are risks, particularly related to external shocks of a sharp increase in interest rates or another recession, but these are generally offsetting risk, and perceived to be low probability.”

Smith cautioned that a huge inflow of easy mortgage credit started the last housing bubble and he sees parallels today in low-cost mortgage money. The award-winning economist concedes experts were “blindsided” by the last recession and don’t know when the next one will appear.